Focus on Jobs and Growth, Says IMFC Chair Tharman

Focus should be on growth and jobs

Structural reforms critical in both advanced and emerging economies

Calibrate fiscal policy to avoid hurting investor confidence

In an interview, Tharman Shanmugaratnam—Deputy Prime Minister of Singapore and Chair of the IMF’s policy steering committee, the IMFC—called on countries to focus more on medium and long term challenges, including intergenerational equity, when formulating economic policy.

IMF Survey : Minister Tharman, you spoke just now of the need for a stronger focus on jobs and growth. What were the IMFC's main recommendations?

Tharman: The IMFC’s recommendation is to look at the long term, not just the short term. We are not going to get velocity unless we have policies which are long-run focused. And they have to be policies that are focused not on macroeconomic adjustments but, first and foremost, on jobs and growth.

What’s more important than just getting the right size of fiscal deficits or the right size of QE [quantitative easing], is composition. Do we have policies which are growth friendly? Do we have policies which will help create jobs—particularly for the young, who are the ones left all over the world, and especially in advanced economies?

In the first phase of recovery from the crisis, there has been a bit too much of slash and burn—that’s part and parcel of the front-loading of adjustment measures. But at this stage, there was a very strong view from around the table that we do need to focus on adjustments that are likely to create jobs and bring back private investor confidence.

That means not just any fiscal adjustment, but the right type of tax measures—avoiding tax increases if they hurt private confidence, avoiding expenditure cuts if they hurt the wrong people in society. So it’s a more discriminating view now of how we should go about the adjustment and the post-crisis recovery.

IMF Survey : What do you see as the biggest take-away from the Spring Meetings?

Tharman: There are two takeaways. First, we didn’t have big disagreements. We had very good discussions, and converged on the same positions. And if I have to summarize the key position that we converged on, it was about the criticality, going forward, of structural reforms, and the criticality of focusing on medium-term fiscal credibility, more than just the short term. The short term only has meaning if...